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Why Intel Is Providing a Buying Opportunity Right Now

NEW YORK (Best Credit) -- Over the last year, Intel (INTC - Get Report) has shown some impressive rallies, rebounding nicely from its sub-$24 lows in January to its recent peaks in the $35 range. Shares currently trade around $33 and are up nearly 27% for the year to date.

Given the overall strength of the personal computer industry, moves like these have been met with some degree of skepticism by some sections of the analyst community.  But relative to its competition, Intel still has a firm hold on its position as the world's leading semiconductor producer and this was largely validated by the positive earnings reports released last month.  That's one of the reasons I think the stock could be a buying opportunity now.


Courtesy of CornerTrader

With the stock trading at such elevated levels, it should be remembered that near-term challenges clearly exist for those with long positions and there are still questions going forward about whether or not the company can continue expanding at its current rate.  But a recent manufacturing agreement with Panasonic and strong evidence of expansion in developing markets strengthens the case for the positive outlook.

Prospects for Continued Strength

Intel has become the brand to beat in a wide variety of sectors within the industry.  Intel continues to place most of its focus on designing and  manufacturing computer components (and related products), with more and more attention being placed on the development and designing of platforms in the smartphone market segment.  Key competitors include Advanced Micro Devices (AMD) and Qualcomm (QCOM), which have also shown some positive fundamental signals in recent quarters but have failed to generate rallies like the one seen in Intel, whose earnings are detailed in the chart below.

Macintosh HD:Users:artemiu5:Desktop:  2014-07-31  02.56.29.png

Intel has also benefited from its dedication to elevated R&D expenditures (20.2% of total sales in  2013), which aids the company in meeting its rigorous production schedules.  Intel introduces new processor technology during odd years and new architecture directions during even years.  Intel's ability to meet these timelines create the framework for enhanced competitive advantage going forward.  

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